National Fair Housing Alliance Alleges Discrimination in Marketing and Maintenance of Foreclosed Properties

WASHINGTON, April 10, 2012 /PRNewswire-USNewswire/ -- Today, the National Fair Housing Alliance (NFHA) and four of its member organizations announced a federal housing discrimination complaint against Wells Fargo & Co. and Wells Fargo Bank, N.A. This complaint, which was filed earlier today with the U.S. Department of Housing and Urban Development, is the result of an undercover investigation of Wells Fargo's bank-owned properties that found foreclosed properties in White areas are much better maintained and marketed by Wells Fargo than such properties in African-American and Latino neighborhoods.

The investigation of 218 foreclosed properties owned by Wells Fargo demonstrates that Wells Fargo has engaged in a systemic practice of maintaining and marketing its foreclosed, bank-owned properties (also known as Real Estate Owned or REO) in a state of disrepair in communities of color while maintaining and marketing REO properties in predominantly White communities in a far superior manner. The Wells Fargo investigation evaluated REO properties in the eight metropolitan areas of Atlanta, GA; Baltimore, MD; Dallas, TX; Dayton, OH; Miami/Fort Lauderdale, FL; Oakland/Richmond/Concord, CA; Philadelphia, PA; and Washington, DC.

Nationally, and in each of the eight metropolitan areas, Wells Fargo's REO properties in communities of color were far more likely to have several deficiencies in maintenance or marketing than REO properties in predominantly White communities.

Without a "for sale" sign, for example, potential homebuyers would simply not know the property is available. Also, if there is storm damage or unauthorized occupants, neighbors have no one to call. With a for sale sign, neighbors can call a real estate agent to report these kinds of problems.

Almost twice as many for sale signs were found in White communities than in communities of color in Philadelphia, PA and Oakland, CA. In Washington, DC, there were four times as many for sale signs in White neighborhoods than in neighborhoods of color. There were no for sale signs at 90 percent of Wells Fargo properties in Dayton, OH's communities of color.

Trash on the property is a health and safety hazard and makes a home unappealing – but this is a very easy problem to fix and should be addressed immediately. Wells Fargo properties in communities of color in Atlanta, Philadelphia, Oakland, Miami, Dallas, and Washington, DC had almost twice as much trash as those in White communities.

"Wells Fargo's disregard for homes in communities of color has severely damaged these communities," said Shanna L. Smith, NFHA President and CEO. "The company has also hindered this nation's efforts to promote fair housing and is in clear violation of the Fair Housing Act."

The National Fair Housing Alliance in Washington, D.C., and four of its member organizations – the Miami Valley Fair Housing Center in Dayton, OH; Housing Opportunities Project for Excellence in Miami, FL; Metro Fair Housing Services in Atlanta, GA; and North Texas Fair Housing Center in Dallas, TX – evaluated the maintenance and marketing of REO properties for the existence of 39 different types of maintenance or marketing deficiencies, such as broken windows and doors, water damage, overgrown lawns, no "for sale" sign, trash on the property, and other deficits.

"We hope that Wells Fargo will take immediate action to correct the stark racial and ethnic disparities we have found in the maintenance and marketing of its foreclosed properties," continued Smith. The Complainants are represented by Peter Romer-Friedman, an attorney at Cohen Milstein Sellers & Toll PLLC, law firm that specializes in class action and other complex litigation on behalf of plaintiffs.

Next week, NFHA will announce another complaint that it will file against another major bank.

Last week, NFHA issued a report on the findings of its nationwide REO investigation, The Banks Are Back, Our Neighborhoods Are Not: Discrimination in the Maintenance and Marketing of REO Properties. The report offers disturbing evidence that the same banks that peddled unsustainable loans to communities of color and triggered the current foreclosure crisis are now exacerbating damage to those communities. It details the results of the evaluation of more than 1,000 REO properties nationwide.

The Fair Housing Act makes it illegal to discriminate based on race, color, national origin, religion, sex, disability or familial status, as well as the race or national origin of residents of a neighborhood. This law applies to housing and housing-related activities, which include the maintenance, appraisal, listing, marketing and selling of homes.

Founded in 1988, the National Fair Housing Alliance is a consortium of more than 220 private, non-profit fair housing organizations, state and local civil rights agencies, and individuals from throughout the United States. Headquartered in Washington, D.C., the National Fair Housing Alliance, through comprehensive education, advocacy and enforcement programs, provides equal access to apartments, houses, mortgage loans and insurance policies for all residents in the nation.

Housing Opportunities Project for Excellence, Inc. (HOPE) was established in 1988 as the first non-profit fair housing agency in the state of Florida. Today, it is the only private, non-profit, full-service fair housing organization in the Miami-Dade and Broward markets. It provides one-of-a-kind education services to the community-at-large, housing providers, lenders and advertisers of housing opportunities.

Metro Fair Housing Services, Inc.is a 38-year-old, non-profit civil rights organization whose primary objective is to fight housing discrimination in metropolitan Atlanta and promote equal housing opportunities throughout the state of Georgia. The agency' mission is to promote social justice and eliminate housing and lending inequities for all people through leadership, education and outreach, public policy advocacy and enforcement of federal and state Fair Housing laws. In the wake of the foreclosure crisis, Metro expanded its homebuyer education services to include foreclosure prevention counseling.

The Miami Valley Fair Housing Center is a comprehensive full-service fair housing center in Dayton, Ohio, with experience in auditing and testing activities, anti-predatory lending investigation and remedy, mortgage rescue scam intervention, foreclosure prevention counseling, mortgage modifications as well as fair housing and fair lending education and outreach. MVFHC works throughout the Miami Valley to eliminate housing discrimination and ensure equal housing opportunity for all people in its region.

For over 40 years, Cohen Milstein Sellers & Toll PLLC has been a pioneer in plaintiff class action lawsuits on behalf of victims of such abuses. As one of the premier firms in the country handling major complex class actions, Cohen Milstein, with more than 60 attorneys and offices in Washington, D.C., New York, Philadelphia, and Chicago, is a firm that specializes in cases concerning Civil Rights, Antitrust, Securities Fraud, Human Rights, Consumer Protection and Unsafe Products, Employee Benefits, and Public Clients. Cohen Milstein has earned its national and international reputation by winning cases that other law firms did not want to handle. The groundbreaking cases Cohen Milstein has litigated have resulted in landmark decisions on previously untried issues involving civil rights, price fixing, securities, and consumer rights.

The work that provided the basis for this publication was supported by funding under a grant with the U.S. Department of Housing and Urban Development. The substance and findings of the work are dedicated to the public. The author and publisher are solely responsible for the accuracy of the statements and interpretations contained in this publication. Such interpretations do not necessarily reflect the views of the Federal Government.